HMRC plans could mean landlords are penalised if tenants break excise laws

News Article

Landlords could face tough penalties for failing to ensure that their tenants are not breaking customs and excise rules, if new proposals by HM Revenue & Customs (HMRC) are given the go-ahead.

A consultation document has been published by HMRC as part of its plans to tackle tobacco and excise duty evasions.

The proposals show that HMRC is considering a number options designed to make landlords more accountable for the actions of their tenants. These options include:

  • HMRC writing to landlords and landowners associations asking them to voluntarily add a clause to their standard leases prohibiting illicit tobacco trading and other illicit excise trading.
  • Potential new legislation imposing a duty of care on landlords and landowners of properties used in tobacco (or other excise duty) fraud. They would be under a duty of care to ensure that their properties are not used to evade duty, and there would be a civil penalty for non-compliance with this duty.

HMRC has suggested that there would be a defence for landlords or landowners who took ‘reasonable steps’ to prevent future wrongdoings in their properties, which might include specific wording in a lease agreement relating to illicit tobacco trading and subsequent eviction for anyone who violates these provisions.

Jeremy Sirrell, a partner and litigation expert with Palmers, said: “This is very disappointing news. If these proposals are passed, HMRC will be given powers which place yet more responsibility on landlords to ‘police’ their portfolio of properties. Considering that a short while ago it became the position that landlords may be responsible for illegal immigrants having tenancy of their properties, it seems the Government expects landlords to be unpaid agents of the state.”

Jeremy continued: “There is still time to object and provide HMRC with feedback on the government’s proposals, as the consultation is open until 12 May 2017.”

He added: “Regardless of the outcome of these latest proposals, this announcement underlines the fact that it is important to ensure any tenancy agreements are professionally drafted and breaches are clearly defined in order to avoid potential disputes.”

For help with all aspects of tenancy agreements or advice on your legal obligations as a landlord, please contact us.